Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Third Quarter 2023 Results Conference Call. At this time all participants are in listen-only mode. Following the presentation we will conduct a question-and-answer session. [Operator Instructions]. I would like to remind everyone that this conference call is being recorded today, November 9 at 9 a.m. Eastern Time. I will now turn the conference over to Candace Brûlé, Vice President, Investor Relations. Please go ahead. Candace Brûlé : Thank you, operator. Good morning and welcome to Hudbay's 2023 third quarter results conference call. Hudbay's financial results were issued yesterday and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenter today is Peter Kukielski, Hudbay's President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Eugene Lei, our Chief Financial Officer, and Andre Lauzon, our Chief Operating Officer. Please note that comments made on today's call may contain forward-looking information, and this information by its nature is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR+ and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted, and now I'll pass the call over to Peter Kukielski.

Thank you, Candace. Good morning, everyone, and thanks for joining us in today's presentation. We'll be taking you through our many record achievements in the third quarter, touching on the operating and financial performance of the business, and providing insight into recent strategic initiatives. In the third quarter, we delivered on our plan for significantly higher production, revenue and cash flow, marking an inflection point as we generate strong returns from our recent brownfield and growth investments across the business. In Peru, operations delivered on plan with anticipated higher copper production and gold production, driven by the higher grades at Pampacancha following a period of higher stripping activities completed in the second quarter. This resulted in the mine's lowest quarterly cash costs on record. In Manitoba, mill recoveries increased meaningfully compared to the prior period as we optimized the circuits at the Stall ore mill and the New Britannia Mill. We saw higher gold and copper grades at the Lalor Mine, which led to strong gold production and lower cash costs during the quarter. We also successfully completed the Rockcliff acquisitions in September, which together with the acquisition of the Cook Lake claim significantly expands our land holding in the Snow Lake area to provide potential future feed sources for the Stall and New Britannia Mills. And in British Columbia, our Copper Mountain Mine had its first full quarter of operations under the Hudbay umbrella. Over the past few months, we've been focused on completing integration activities, advancing our plans for ramping up the mining fleet, and planning for mill stability and reliability improvement initiatives. With the strong operating performance in the third quarter, we have reaffirmed our 2023 full year production and cost guidance for our Peru and Manitoba operations. We've also updated our consolidated 2023 guidance to incorporate…

Thank you. [Operator Instructions]. And our first question today comes from the line of Ralph Profiti of Eight Capital. Your line is open.

Thanks. Good morning, everyone. Peter, and perhaps Andre, I just had a question on copper recoveries at Copper Mountain hitting 81% in Q3. And it's been intimated that those design rates are hovering around sort of 84%, 85% as the goal. I'm just wondering, how much of that is a function of expected higher copper grades, or are there adjustments still to come in the processing circuit? And when perhaps we can see that 84%, 85%? Is that sort of a first half ‘24 phenomenon or more allocated towards the second half?

Good morning, Ralph, and thanks very much for the question. I'm actually going to ask Andre to address the question for you. He'll do much fuller than I will be able to.

Sure. Thanks for the question and it's a good one. The recoveries have improved significantly since we've been able to integrate with the operation. There's still more to go. Most of the challenges to-date aren't – or not challenges. The grade improvements are tied to technical and grind size issues. And so, right now, at the current throughputs, we've had to balance, call it grain size to liberate the recoveries. Over the next year, so into 2024, we plan on optimizing our throughput in terms of a stable throughput. So stability of the plant is key for us to achieve really good recoveries, up in the 85% range. That's going to happen over probably 18 months or so in that range as we put in new maintenance practices. We're looking at optimizing some of the reagents and balancing feeds between the SAG mill and the ball mills that currently are a bit of a bottleneck. We can hit as high as 45,000 tonnes per day. But until we get those technical solutions in place, what happens is that we send two cores of a feed through and our cyclones can't keep up and we plug lines in the lake. And so your question, if I go back to it, was around, is it related to grade? I'd say the answer is, no. So it's a combination of technical solutions that we're working on in the short term, like over into next year. And then the maintenance reliability initiatives that Peter mentioned earlier in the call, those will stabilize the plant and those will over the next 18 months or so, those will get us to that level in that 85% range.

Okay. Thanks Andre. Very helpful. Peter and perhaps Eugene, it's about $45 million in lower CapEx guidance over the course of 2023. How much of this is sort of deferrals and rephasing into 2024 or should we consider the bulk of these reductions truer to greater efficiencies, optimization synergies?

I think both, but Eugene?

Yeah, the answer is both. And it's $30 million in capital savings from the original guidance, and they are across the board actually. So some of the capital savings are in Manitoba, and those are from sustaining capital, and that's actually from more efficient mining and less development. It's about a combination of both in Peru in terms of a bit more efficiency and some deferrals. And then there's the $5 million in Arizona that is deferral to do work that we don't need until we have the permits and the partner in hand. So it's a combination of focusing on deleveraging, to allow us to invest in the pipeline in the most prudent way and enhance our operating cash flow platform.

Yep. Very helpful. Thanks very much.

Your next question comes from a line of Jackie Przybylowski from BMO Capital Markets. Your line is open.

Thank you very much, and congratulations on a great quarter. Maybe if I can ask just maybe a quick one first. I've seen some headlines that one of your former employees, Javier Toro, moved over to Solaris. I was wondering if you could talk a little bit about any impacts that might have on your operations?

Jackie, morning. Thanks very much for the kind comment. I think our industry is characterized by mobility of high-quality people. And – I mean, Javier has been with us for a long time. He worked on the original Constancia project. He's been instrumental in advancing Copper World with us, but it's time for him to take on a new challenge. One of the good things that happens when you get mobility of people is it creates opportunity for others in the organization to move on up. And so we've got a very, very strong bench strength behind Javier in the company that enables us just to move other people up and along. So, while we're sorry to see Javier go, and we expect him to probably return one of these days, in the meanwhile, we're going to give some of our other younger folks some real opportunities to move on up. So we don't anticipate that there'll be any impact on the company at all.

Great. That's helpful. Thanks Peter. Maybe another question. I don't know if this one's for Andre, but on Snow Lake, it looks like you've had really terrific success with the recovery improvement project at Stall. I was wondering if you could talk a little bit about your thinking for any future optimizations or improvements in Snow Lake or what your plans are maybe going forward there?

Yeah, sure. Thanks for that, Jackie. So as Peter mentioned, the exploration story is something that is probably one of the most exciting things I think that we're going to see in the coming years. It's really – it's the first time around Lalor where we've consolidated the land package. And so we have this unique opportunity to explore it to its full potential. And so we're really excited about that possibility to either find new satellites or potentially an anchor deposit, so that's probably number one. Number two, we've really made some strong headway on the 1901 deposit. So we put that on pause a little bit, about a year ago. The financials and the design, the plan just wasn't strong enough for us to allocate capital to it. And the teams have done just an amazing job of rethinking it to where we're looking at advancing some exploration, drifting into next year and drilling, to better optimize the project, and the returns on that look much stronger now that I think it'll definitely come into our plan, and that'll fully optimize feed to Stall mill at New Brit. So New Britannia is achieving what we always hope it did. And now it's exceeding the throughput on a daily basis. We're seeing periods of upwards of 2000 tons per day. We're in the process of permitting it up to 2500. But right now, Rob and team are really focusing on some minor bottlenecks around some of the pumps that are a little bit high maintenance that feed the tailing system that seems to constrain us a little bit and some other maintenance activities. But the opportunity there is for us, is to really increase the throughput at New Britannia, which makes – we have a surplus of gold resource in the Snow Lake area and getting to very high 90% recoveries through New Brit just is really, really exciting. And so as well, if I pivot just a little bit while we're talking on Manitoba, the team in Flin Flon areas have done some really good work around de-risking that. And this is our first full year where we've – since 777 and the zinc plant has closed and they've come up with some really innovative ways to reduce the cost of treatment of waters and the like. We've had significant savings and we're working very well. And Peter mentioned around the tailings opportunity and our plan is to turn that potential, which was perceived by some as a liability in the past to an asset. And we're really excited about that in combination with the Marubeni exploration. So there's a lot of exciting things going on, right, across the board in Manitoba.

That's fantastic. That's a great list. Thanks Andre. And maybe if you don't mind, if I can ask one last question. I know you've curtailed some of your spending at Copper World, which makes a lot of sense for the near term. Can you give us a bit of an update on any of the project works that you might be starting next year or what the spend could look like next year, assuming you get your permits as you're expecting?

Yeah, sure. It’s a good question. So there's some further optimization around the plans. Pending, getting our permits, as Eugene had mentioned previously, is we'll be really accelerating getting a partner and moving into feasibility. So Javier and team, pending the timing of those permits, we'll be looking at building our team in Arizona to support those feasibility studies and advancing it to the next stages pre-construction. So the first steps will be wrapping up the team, getting the right people in place to deliver those feasibility studies, and that'll probably be later in the year.

But the work… [Multiple Speakers]

That was fantastic. Thanks very much.

The work really right now is focused on supporting the permitting application process and readiness for the JV process.

Correct.

Got it.

And your next question – sorry, [Operator Instructions]. And your next question comes from the line of Stefan Ioannou from Cormark Securities. Your line is open.

Great. Thanks very much. And again, congratulations on a great quarter as promised. Just maybe a sort of a general question that might not have a simple answer, but just kind of curious. Obviously, a lot of focus on still deleveraging and the balance sheets, health and stuff. Just wondering if you could maybe comment on sort of just your strategic sort of hierarchical thinking of various opportunities. Mainly how does exploration stack up against some other things like Copper World and deleveraging itself and sort of the grand scheme of how you plan to spend money over the foreseeable future?

Hi, Stefan. Morning, and thanks for your kind words. I think if I step back, right now what we're doing is all about delivery. Exploration of course is a key component of planning for the future. And like Andre said, we are super excited by both, the scale and intensity and potential of the exploration efforts in Manitoba. We will continue to do some exploratory work associated with the Mason Project through the rest of this year and into next year in order to bring that along, but those are not big dollar numbers. Outside of that, we are razor focused on getting access to the Maria Reyna and Caballito properties to start exploring as soon as possible. And so, that's a key initiative to advance that. But the spending there is more in the context of associated with the regulatory regime of getting the drilling permits in hand. But strategically, once we have those, we're going to go flat out. So exploration does comprise a big part of our strategy going forward. But as I said, delivery is key. So delivery in the context of Copper Mountain, stabilizing and optimizing that is a key strategic initiative for us and advancing Copper World towards a sanctioning decision. I would also say that – I mean I've always said that we have a very skilled team when it comes to efficient operations and development of projects. And I do continue to feel that we can create value, both from operating and at least from both, improving what we have, developing our project pipeline, but also adding another operating asset to our portfolio if indeed we can find one and if it's going to be accretive to our shareholders. So we continue to look for those assets, but we're very, very focused on delivery at that point, because we think that will provide us with the license for the other stuff that we want to do.

Okay, great. That's helpful. Thanks very much.

Your next question comes from the line of Dalton Baretto from Canaccord Genuity. Your line is open.

Thanks. Good morning, Peter, and team. I wanted to start by asking about Copper Mountain. There's some language in the disclosure that suggests that your estimates around reserves will be closer to the old Jan 2019 estimate versus the September 22, and it's a considerably lower number. I'm just wondering, what's driving that? Is it just the removal of the expansion or is there something else that's driving that?

I'll start with a sort of broader comment, Dalton. First, morning, and thank you for that. The 2022 technical report that Copper Mountain issued was based on very optimistic assumptions on all aspects of the 2022 Life of Mine Plan, and that's the reason why we never endorsed it. Our acquisition process was based on an internal mine developed by a mine plan that was developed by us from the information made to us – available to us by Copper Mountain and was more in line with the reserves and mill throughput assumptions in technical reports published by Copper Mountain prior to 2020. So we never, absolutely never endorsed their 2022 plan. And as I say, the work that we did was more aligned with their prior plans. But Andre, do you want to expand on that?

I think you covered it off quite well. The teams have used the same approach in resource modeling that we do at all of our operations, whether it's in Peru at Constancia, where we've been mining for a number of years and our models as you know reconcile very, very well to our forecasts and what we produce. We use the same methodology at Copper World. And so the teams have worked rigorously on database validation, generating models and we actually have a model now that reconciles very, very well to the mill. Over the last couple of months, our new model has reconciled very, very close, and that gives us a lot of confidence in terms of building our technical report and plans and forecasts going forward. I think that's something that Copper Mountain has struggled with in the past, was the reconciliation of their block models to the mill. And so I would say that we've applied our technologies. We haven't tried to justify the 2022 resource, I think, in terms of the overall, but I feel very strongly on the ones that we have today. So in terms of the overall, we're not planning, as Peter kind of talked, to mention a little bit is about the endorsement of their 2022 plan. Our intention is, why we say back to the 2019 is, it's about a 45,000 ton a day technical report, and we're leaning towards something like that with some potential expansion potential, but not the 65,000 ton a day plan that's currently in – that was posted in the 2022 model.

Got it. Thank you for that. And then I know the report's coming out in the next couple of weeks, but can you give us some sense on the accelerated stripping campaign, just in terms of scope and what the capital implications are for next year for that mine?

We're still working on it, we're still working on it. But with the ramp up that we're planning to get to, like Peter said, to the 26 trucks by December, that throughput will be very, very close to the stripping rate that's required on an annual basis. So we're still doing a little bit of fine tuning. So it's a little bit premature to say exactly the amount, but it's in that range. And so like, by December we should be in the 200,000 to 250,000 tons a day of total material movement in that range.

Great. Thank you, Andre. And then maybe if I can squeeze the last one in for you Peter or Eugene. On the Copper World JV process, where are you in that process right now? And do you anticipate the project design changing at all in the feasibility study once you have a partner in place?

Thanks, Dalton. No, not really. Remember that the pre-feas, it was a good pre-feasibility study based on in many cases, sort of a definitive feasibility level in engineering. So I don't anticipate changes during the feasibility study process. But at the same time, we would like to afford a partner, the ability to tweak elements of the design if needed or if appropriate or if it creates value. Where we are right now is that we feel that the process is best left to kick off around about the time that we have certainty with respect to the issue of our permits. Because once we have the permits in hand, of course the project becomes very, very significantly de-risked and offers us the opportunity to probably get more value out of a potential partner. That said, we're moving towards – we're sort of doing quite a lot of work with potential partners to get people up to speed. So that when we kick a process off as we get the permits, it becomes a much more efficient process.

That's great. Thank you, Peter. That's all for me.

Thanks, Dalton.

This concludes the question-and-answer session. I would like to turn the conference back over to Candace Brûlé for any closing remarks. Candace Brûlé: Thank you, operator, and thank you everyone for joining us today. If you have any further questions, please reach out to our investor relations team. Thank you and have a great day.

Ladies and gentlemen, this concludes the conference call for today. You can now disconnect your lines.